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NASDAQ-Adv: 2,437 Dec: 1,830 NYSE-Adv: 2,315 Dec: 1,700 (Source: Nasdaq)

Wall Street’s main indexes fell on Thursday, dragged down by Cisco and Walmart following underwhelming forecasts, while a drop in Treasury yields cushioned some megacap stocks.

Shares of Cisco Systems (CSCO.O) shed 11.8% as the communications and networking firm cut its full-year revenue and profit forecasts on slowing demand for its networking equipment.

Walmart (WMT.N) dropped 7.4% as the retail giant said U.S. consumers continued to exert caution with their spending in the face of inflation, even as it raised its annual forecast for sales and profit.

The company’s warning also weighed on shares of other retailers. Target (TGT.N), which had given a strong holiday quarter outlook on Wednesday, fell 0.9%, with the broader S&P 500 consumer staples index (.SPLRCS) down 1.1%.

“The markets are just taking a step back after some disappointing guidance from Cisco and Walmart,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

“Both are seen as kind of a backbone of their respective industries. So it calls a little bit into question the health of the consumer and maybe the health of the technology sector.”

Wall Street’s main indexes have rallied this week as evidence of cooling inflation in the world’s largest economy fueled hopes the U.S. Federal Reserve was most likely done hiking interest rates.

In a data-packed week that saw the tech-heavy Nasdaq (.IXIC) hitting an over three-month high, markets also took comfort from the U.S. Senate’s passage of a stopgap spending bill to avert a government shutdown.

Keeping declines in check, U.S. Treasury yields moved lower after the Labor Department’s report showed weekly jobless claims had risen more than expected, cementing bets that the Fed will not need to raise rates further.

The slip in Treasury yields lifted some megacap stocks, with Apple (AAPL.O), Microsoft (MSFT.O) and Alphabet (GOOGL.O) up between 0.7% and 1.1%.

While money markets have fully priced in a probability that the Fed will hold rates steady in its December meeting, they see about 62% odds of an at least 25-basis-point rate cut in May, according to CME Group’s FedWatch tool.

Energy (.SPNY) led declines among the 11 major S&P sectors, falling 2.9% and hitting a four-month low as crude prices dropped over 4%.

At 11:49 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 135.23 points, or 0.39%, at 34,855.98, the S&P 500 (.SPX) was down 9.34 points, or 0.21%, at 4,493.54, and the Nasdaq Composite (.IXIC) was down 44.38 points, or 0.31%, at 14,059.45.

Among other stocks, Palo Alto Networks (PANW.O) fell 6.9% after the cybersecurity company forecast its second-quarter billings below market expectations due to inflationary pressures.

Macy’s (M.N) shares climbed 6.8% as the department store operator’s quarterly sales beat analysts’ estimates.

Declining issues outnumbered advancers for a 1.87-to-1 ratio on the NYSE and a 2.35-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 27 new highs and 79 new lows.
Source: Reuters (Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Maju Samuel and Pooja Desai)

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